The Latest: ECB projects slow increase in inflation

FRANKFURT, Germany (AP) " The Latest on the European Central Bank's monetary policy meeting (all times local):

2:45 p.m.

The European Central Bank has lowered its projection for inflation next year to 1.2 percent from 1.3 percent, a step that could support arguments for more monetary stimulus to raise price levels closer to the bank's goal.

But the ECB left its outlook for 2018 unchanged at 1.6 percent. That indicates it sees itself getting gradually closer to its goal of just under 2 percent over the longer term.

The bank has implemented a raft of stimulus measures in an effort to raise inflation from the current annual rate of 0.2 percent, which it expects to be the average for this year.

At a news conference, President Mario Draghi said the bank expects the eurozone economy to grow "at a moderate but steady pace."

Earlier Thursday, the central bank kept its key interest rates on hold and decided against extending the duration of its bond-buying stimulus program beyond March 2017.

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2:20 p.m.

The decision by the European Central Bank to keep its policy unchanged weighed on stock markets across Europe but helped the euro rally to two-week highs against the dollar.

Focus will now turn to ECB President Mario Draghi who will host a post-decision press conference shortly. He is likely to be quizzed on how close the bank came to extending the duration of its bond-buying stimulus program.

The ECB is facing stubbornly low annual inflation of only 0.2 percent despite pumping 1 trillion euros ($1.1 trillion) in newly printed money into the banking system through bond purchases since March, 2015. The purchases, made at a rate of 80 billion euros a month, are set to continue through at least through March, 2017 or until inflation convincingly picks up. The bank left that earliest end-date unchanged.

The move in markets following the decision suggests that some investors thought the bank would extend its bond-buying program. France's CAC-40 was down 0.4 percent at 4,541 while Germany's DAX fell 0.6 percent to 10,690. The euro was trading 0.5 percent higher at $1.13.

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1:50 p.m.

The European Central Bank has left its key interest rates unchanged and decided against extending the duration of its bond-buying stimulus program.

Investors are waiting to hear what ECB President Mario Draghi says about the outlook at a subsequent news conference.

The central bank faces stubbornly low annual inflation of only 0.2 percent despite pumping 1 trillion euros ($1.1 trillion) in newly printed money into the banking system through bond purchases since March, 2015. The purchases, made at a rate of 80 billion euros a month, are set to continue at least through March, 2017 or until inflation convincingly picks up.

Draghi could indicate Thursday that the bank is ready to extend the bond-buying program.

The central bank's 25-member governing council left its benchmark rate at zero and its rate on deposits from commercial banks at minus 0.4 percent.

This story has been automatically published from the Associated Press wire which uses US spellings

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